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Financial Repression And Propaganda Intensifying Ahead Of Economic Chaos
Greetings,
Financial Repression And Propaganda Intensifying Ahead Of Economic Chaos
With continued volatility in global markets, today one of the top economists in the world sent King World News an incredibly powerful piece warning that a full-blown depression will force radical changes. Below is the fantastic piece from Michael Pento.
By Michael Pento of Pento Portfolio Strategies
Seven years of extraordinary fiscal and monetary stimuli are proving ineffective towards achieving the growth and inflation targets laid out by the Federal Reserve. The Consumer Price Index (CPI), the Producer Price Index (PPI) and Gross Domestic Product (GDP) have all failed to grow over 2%. This is because asset prices, at these historically high levels, need massive and ever increasing amounts of QE (new money creation) to stave off the gravitational forces of deflation and depression. Fittingly, it isn’t much of a mystery that the major U.S. averages have gone nowhere since QE officially ended in October of 2014…
According to the highly accurate Atlanta Fed model, GDP for Q3 will be reported at an annual growth rate of just 0.9%. And things don’t appear to be getting any better for those who erroneously believe growth comes from inflation: September core retail sales fell 0.1%, PPI month over month (M/M) was down 0.5% and year over year (Y/Y) was down 1.1%. CPI was down 0.2% M/M and the Y/Y headline level was unchanged.
While the deflation effect from plummeting oil prices wears off by years end, there is no reason to believe the same deflationary forces that sent oil and other commodities down to the Great Recession lows won’t start to spill over to the other components, such as housing and apparel, inside the inflation basket. This would especially be true if the Fed continued threatening to raise interest rates and driving the U.S. dollar higher.
Central banks and governments can always produce any monetary environment they desire. It is a fallacy to believe that deflation is harder to fight than inflation. Deflation is only viewed as harder to fight because the policies needed to create that monetary inflation have not yet been fully embraced—although this is changing rapidly.
Fed Policy Failures Becoming More Apparent
The Fed just can’t seem to grasp why its newly minted $3.5 trillion since 2008 hasn’t filtered through the economy. But this is simply because the debt-disabled consumers were never allowed to deleverage and markets were never allowed to fully clear.
But the Fed isn’t one to let the truth get in the way of its Keynesian story. And why should it? Financial crisis is the mother’s milk of increased central bank power. For example, before the last financial crisis the Fed was unable to buy mortgage-backed securities; rules were then changed to allow it to purchase unlimited quantities of distressed mortgage debt. The Fed is perversely empowered to continue making greater mistakes, thus yielding them greater authority over financial institutions and markets…….More Here
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