Monday, August 8, 2016

The Economy: “The Ramifications Of The Unsustainable”

“The Ramifications Of The Unsustainable”
by Steve, IWB

"The longer this malaise goes, the more fragile the situation becomes. The current Fed policies can only keep the economy’s head above water with stocks and housing over peaking. Cheap money = asset speculation = absurd rent and food costs (inflation). This creates a wealth drain on the 70% (income inequality). Sooner or later these “economists” have to say it. There is little cash left after absurd rent and food to grow an economy. 70% are basically living week to week. Even 1% unemployment wont do much for GDP. It’s all going to rent, food, healthcare, and maybe a movie. Look at fast food price wars, mall closings, for lease signs all over. The signs are everywhere. The consumers even with all their new jobs are tapped. NO GROWTH unless you count Fed stimulus growth which the government does. This is all hopium. You can't squeeze blood out of a grape. The longer this wealth transfer goes, the worse the drain gets. Remember, in reality, two $17 hr jobs replacing one $50 hr job is still a 33% loss in GDP or equal to net one layoff.

The longer this malaise goes, the more fragile the situation becomes. The current Fed policies can only keep the economy’s head above water with stocks and housing over peaking. They will be forced to go negative with no other options except helicopter money just to maintain maybe 1% growth. None of the global black swans that have landed are resolved. They are still out there. One of the next ones will be the tipping point. Why?

We are working “unsustainable” efforts. The ramifications of unsustainable is collapse. Total? Nobody knows. But it is a mathematical certainty.

The only way out of this cycle of monetary policy.to the next cycle is either bring up wages to standard of living (rents food), or living costs will have to come down to wages. You dont see business investment much, or wages going up much. Why? Because they see the obvious– the consumer is tapped and getting more drained. Economists toss around the word “uncertain”. Hogwash. There is no uncertainty about it.

I have warned everyone many times. One of the next black swans will start the reversal in psychology to this reality of a washed-out poor/middle class and start the process of changing cycles. The event will bring enough panic to change psychology to fear and money hoarding, which many are already doing. THEN you will see it – layoffs. Layoffs will create a renter collapse/exodus as they finally say I won't/can't pay this absurd rent. This will force sales for property owners which will expedite the cycle change in a housing bust which will bring rents down again. How bad will it get this time before the next recovery and how long will it take? Nobody knows. But imho, in the law of action and reaction, with unprecedented Fed intervention, there may be an unprecedented bust. This is not gloom and doom. Its simply a mathematical certainty. It is the ramification of unsustainable. It is called the cost, or the bill for cheap money. None of the bill have been paid. It is over due and acquiring interest daily.”
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