A Nation Of Junkies: The Empty Future Of A Stimulus-Speculation Economy

There is no way to stop the US economy from being totally dependent on the trillions of dollars spent in stimulus and the speculative gains made.

Real Economy

left to pick up the pieces when the credit-stimulus-speculation bubbles all pop.

When economists talk of

Organic growth

They're talking about growth that occurs naturally

The growth of the population, the gains in productivity from improved training and investments, and the fruits from innovation.

Growth by organic means

It doesn't depend on speculation or constant stimulation.

The government and central banks don't have to energize the economy to make it function. The role of the central bank is limited in an economy not dependent on stimuli. It is the lender of the last resort during periodic financial crises. And the government's job is to serve the public good by funding things that are beneficial to the community but aren't profitable for private companies, such as rural electrification or critical infrastructure.

Compare this

Real Economy

With the

Artificial Economy

We now have a system that is totally dependent on government and central bank stimulus, and rampant speculative activity.

The economy would crash if either the stimulus or the speculation disappeared. Asset bubbles would burst without constant monetary and fiscal stimuli.

Every decision in this stimulus-speculation-dependent economy is keyed off of Federal Reserve stimulus or federal spending guarantees.

Take the decision of whether to build or buy a home to live in, or to hold it as an investment. The Federal Reserve is manipulating mortgage rates, the mortgage market (mortgage-backed securities), and federal government guarantees and backstops.

Look at the chart below to see the Fed's "intervention" on the mortgage market.

The housing/mortgage market somehow survived before 2009 without the Fed having any mortgage-backed securities, but the Fed now must intervene in the trillions of dollar range to prevent the market from collapsing.

All of this "help" is sold to the public as "help", but in the end, it only "helps" a few wealthy people at the expense for the other 90%.

Take a look at the charts below. They show the wealth percentages of the top 1% of households and the wealth percentages of the middle class - those households with incomes between 50% and 90 %. Each new Fed/federal stimulus increases the wealth for the top 1% and lowers the wealth for the middle class.

The soaring wealth among the top 1% of Americans is "success", according to those who are pushing for stimulus. This is because they have a circle of friends and colleagues in this group.

Everyone must be doing well if we are doing well.

This is the hubris of our financial and political leaders.

Three charts show parabolic increases: the Fed balance, federal debt, and total debt.

Credit is the primary stimulus: increase credit availability and, until recently, make borrowing cheaper by manipulating rates of interest lower.

This "free money", which was a form of "growth", has weakened the economy.

In response to all of this credit and stimulus, corporations bought tens or thousands of houses as rentals, causing another housing bubble. Tens of thousands have been purchased by investors to take advantage of the short-term rentals (AirBnB, etc.). Rents are rising as a result of the boom.

The debt and stimulus spiraling upwards in a parabolic fashion cannot be good.

They eventually collapse under their own mass.

Everyone has an excuse for being a junkie.

Every junkie proclaims

You can stop at any time.

There is no way to stop the US economy from being totally dependent on the trillions of dollars spent in stimulus and the speculative gains made.

Real Economy

left to pick up the pieces when the credit-stimulus-speculation bubbles all pop.

We are treated to the childish charades by the Federal Reserve and elected officials

Both bleating about how absurd everything is in private with their mics safely muted. They're desperate for a few extra months to delay the inevitable collapse. There is no other option, no way back to a normal economy which doesn't depend on massive injections of stimuli and debt increases.

Friends, the US economy is not able to absorb the upcoming injections of stimuli.

The costs of dependency on artifices of stimulus and mood enhancement--everything's wunnerful!--are coming due, as they always do.

There is no other solution.

Cold Turkey

The collapse of all stimuli and speculation.

You're about discover how unpleasant it can be

Cold Turkey

It can be very difficult, and babbles of denial only make things worse.

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