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Saturday, April 25, 2015

Stocks or Economy...Does Either Represent Reality?

US (and global) stocks are in search of the moon.  What do these indexes represent (Wilshire 5000 below)?  Funny, the previous acknowledged bubbles are called out...but folks in the know at the Fed and on Wall St. tell us nothing to worry about this time.
Perhaps we should do a little independent research rather than rely on the PhD's and monied interests.  Below is annual US GDP subtracting total US federal debt.  Something about this relationship of economic growth vs. federal debt (and that debts service) looks broken since '07?

Below is the annual GDP growth subtracting the annual growth of the federal debt.  No economic growth since '07...looks like we are pretending the growth of debt represents a growing economy?

The below chart highlights annual change in GDP, annual change in debt, and annual change in GDP minus annual change in federal debt.  Declining GDP since '07 and only 3 years since '01 that the GDP growth was positive after subtracting the new federal debt growth.

Below chart shows growth of federal debt '08 through '14 and the sources of buying for all Treasury debt.  "Foreign" buying carried the day.  The Federal Reserve, all domestic sources, and intra-government combined didn't buy as much as the "foreign" bid.

Below just a peak at the annual federal debt and sources of buying.

"Foreign" buying saved the US from Greek like interest rates which would have forced tax hikes and spending cuts.  Thank goodness the world loves American debt?!?

But then again, maybe the Fed has taken over the majority of the "foreign" bid since July '11 and that's why BRICS + OPEC net sales of Treasury debt since July '11 hasn't bothered interest rates one bit...(detailed in link).

Or maybe now the stock market is reality and the only indicator of any importance?  Those in the know reassure us daily (24x7) all is well.  Phewww, that's a relief cause I was almost getting myself riled up about a slowing economy...which apparently is not a reality that matters any longer to the stock markets, the Fed, or Wall St.


  1. Followed your link from SD

    Fine Work!

    1. One day back in 2008, during the crisis, I turned on CNBC at 6:30am. Right after returning from a commercial, a very sickly and somber looking Joe Kernan throws up his hands and says "that's if folks, that's all it lose" referring to the DOW futures being down 555. Everyone believed that day would make history. By the grace of god, by 4pm, the market had closed green.
      It was on that day I told my friends, family and anyone who would listen "it is all about the market". When it comes down to pensions, 401(k), bank accounts and the market - the market is most important.

  2. Ladies and gentlemen, the Global Economic Hindenburg has just completed another successful period as reported by the BLS. The whole journey was fueled solely by the incredible buoyancy of freshly created counterfeit fiat money. This marvelous machine was created by the greatest financial minds and has enabled the 1% to become filthy rich. All eyes are fixed on this monetary miracle as it approaches the mooring tower to dock in preparation for even more prosperous endeavors...


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