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Good Economic Numbers? Don’t Be Fooled By The Financial Sugar High

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The U.S. financial system is like a junkie that needs continually increasing amounts of “junk” to get the same “buzz”.  So what is the U.S. financial system addicted to?  It is addicted to money and debt.  For many years, whenever the Federal Reserve would lower interest rates or the U.S government would borrow and spend more money, the U.S. economy would respond positively.  But just like with any other kind of artificial stimulation, over time it has taken greater and greater amounts of debt and cheap money to get a response from our economic system.  So yes, the fact that the official unemployment rate went down 0.1%  last month is good news, but considering the massive amount of spending that the U.S. government is doing and considering the gigantic quantity of money that the Federal Reserve is injecting into the financial system, the truth is that the unemployment rate should be falling much faster than that.  So don’t be fooled by the good economic numbers and don’t be fooled by the financial “sugar rush”.  The U.S. government and the Federal Reserve have been pulling out all the stops to stimulate the economy, and the fact that all of their efforts are barely moving the unemployment rate at all is an indication of just how far our economic situation has degenerated.

Many in the mainstream media were extremely excited when the U.S. Bureau of Labor Statistics announced that the U.S. unemployment rate declined to 8.8% in March.  U.S. stocks soared as investors enthusiastically welcomed the news.  But should we all really be jumping up and down over this?

The truth is that some other measures show that the unemployment situation in the United States is becoming worse.

According to Gallup, the number of Americans that are either unemployed or working part-time but desiring full-time work actually rose from 19.8 percent in February to 20.3 percent in March.

So let us not get too excited about the employment situation.  Yes, unemployment is not spinning wildly out of control at the moment and that is good news.

However, when you look at the larger picture things look rather grim.

What the U.S. government and the Federal Reserve have been doing is that they have been mortgaging our future big time for short-term economic gain.

This year alone, the U.S. government is going to run an all-time record budget deficit of approximately 1.6 trillion dollars.  By borrowing 1.6 trillion dollars that we do not have and spending it into the system, it does stimulate the economy.

There are some members of Congress that would like to implement substantial budget cuts, but most members of Congress fear doing too much budget cutting right now because it would “harm the economy”.

And you know what?  They are right – budget cuts would harm our economy in the short-term.

But continuing to pile up all of this debt is setting the stage for an absolute economic nightmare in the mid to long term.

We have lived far, far beyond our means for decades, and most of our politicians are acting like this can go forever.

But tell me, does anyone out there actually believe that we can keep expanding the national debt like this indefinitely?….

Yes, government spending does stimulate the economy.  The Keynesians are right about that.

However, by accumulating a national debt that is spinning wildly out of control, we have completely destroyed the economic future of this nation.

The Federal Reserve has been very busy trying to stimulate the U.S. economy as well.

Over the past couple of years, the Fed has been injecting massive amounts of money into the financial system.  The theory is that the financial system will loan this money out to the American people and that will stimulate the economy and create more jobs.

Well, that may very well be true to a certain extent in the short-term, but as I wrote about yesterday, in the long-term this is going to create a substantial amount of inflation.

The chart posted below cannot be emphasized enough.  It shows how the Fed has dramatically increased the size of the adjusted monetary base since mid-2008….

Yes, all of this new money will stimulate economic activity, but it is completely and totally ludicrous for Ben Bernanke to attempt to deny that this is also going to cause significant inflation.

So when taking a look at the economic numbers, it is absolutely critical to keep in mind that our “authorities” have pushed all the chips to the middle of the table in an all-out attempt to stimulate the economy in the short-term.

The small economic “sugar rush” that we are experiencing right now is all we have gotten out of it so far.

Sadly, this is about the best that the U.S. economy is going to do from now on.  Things really are not going to get much better than this.

Yes, unemployment numbers might come down a little more, but pretty soon inflation is going to really kick in and that is going to have a really negative impact on tens of millions of Americans.

First of all, when inflation really starts taking off it is going to be absolutely devastating for those on fixed incomes.  Many of them will be completely wiped out.

Secondly, those that do have jobs are going to find that their incomes are not nearly keeping up with inflation.

In fact, we are seeing this starting to happen already.

According to the Bureau of Labor Statistics, U.S. workers in the private sector only saw their pay increase by 2.1% during 2010.

So did what we are paying for food and gas only go up 2.1% in 2010?

Of course not.

So are things getting better so far in 2011?


One of the depressing things about the new numbers released by U.S. Bureau of Labor Statistics was that wages for U.S. workers did not increase in March.

According to the BLS, the average U.S. worker earned $22.87 an hour during the month of March, which is exactly the same number we saw in February.

So inflation is going up and wages are staying flat.

That means that American family budgets are going to be squeezed even more.

In addition, the numbers from the BLS show that it is still incredibly difficult to get a job.  In fact, the average length of unemployment in the U.S. is now an all-time record 39 weeks.

So is anyone doing well right now?

Well, yes – as I have written about previously, those at the very top of the food chain are doing quite well these days.

According to USA Today, median CEO pay soared 27 percent during 2010.  For the year, median CEO pay was a stunning $9.0 million.

Wouldn’t you like to be making 9 million dollars a year?

According a recent report by CNN, the 25 highest-paid hedge fund managers in the United States combined to bring in an astounding $22.07 billion in income during 2010.

Wouldn’t you like to get just a small piece of that?

All of the measures that the government and the Federal Reserve are using to stimulate the economy are causing tremendous distortions in our financial system.

Wall Street is absolutely swimming in cash right now.  There are some people that are making obscene amounts of money.

But ultimately the party is going to end for all of us.

It has been incredibly foolish for the government and the Fed to go “all in” in a desperate attempt to boost short-term economic numbers.

Our long-term economic future is completely gone.  Our financial system is heading for a horrible collapse.  It is not a matter of “if” it will happen, but rather “when” it will happen.

You better buckle up and get ready.

  • impeachRonPaul

    Good article. We hear a lot about taxing the rich which I do not believe is the problem. The issue is with unfair salaries. We need a more level playing field.

  • tallboy48

    and then theres news the GOP is going to cave on teh budget. they cant even stick to their guns and promises and cut out 100 billion dollars out of a multiTRILLION dollar budget. we truly are on our folks. pray and prepare

  • Darren

    I believe we are just now in the beginning phase of hyperinflation and it will only get worse from here on out. Most people I talk to today think that we will eventually pull out of this slump because we are the U.S. of A and nothing bad can happen to us. But there were many great and mighty empires Like Rome and Great Brittan that collapsed because of Greed. People need to wake up and prepare for a total worldwide economic collapse.

  • 007

    I am impressed as hell by this recovery. Wow, the unemployment rate went down again. I would even be more impressed if the rate wasn’t going down because people were mysteriously falling off of the work rolls. The percentage of people seeking a job has declined below 66%. The lowest percentage since 1984.

    As has been published by gallop the true percentage unemployed is 10%. The people working crappy, part time, burger flipper jobs, that want real jobs raises the undemployment rate to 19%. just about the same as was in the great depression.

    Go Obama. Try harder you can make another 5,000,000 Americans give up on finding a job. Then you can brag how you have brought the bogus unemployment rate to 5%.

    I bet that unemployment rate drops makes the starving person who has no hope of a job warm and full at night.

  • van johnson

    $5 gas is comin like a freakin tsunami and it’ll be just as destructive.whatever growth u got now will vanish like houdini.

  • When trying to explain this problem to my wife, I tell her it is like if we were paying the mortage on the house with credit cards. Now that she can understand.

  • mondobeyondo

    You are correct, sir!

    Want to know why the Dow Jones stock index is at its highest level in nearly 2 years? It’s all that QE2 money filtering through the system. Wall Street and the banks always get this new money first, and then it filters down to we, the people. Wall Street is not just living high on the hog, they’re living high, period. For them, money is a drug. Bernanke is just giving the big banks more and more money to inject and snort. Of course, the banks are loving it. You would too, if you were a heroin or cocaine junkie.

    But by the time it filters down to us, the value of all that cash is greatly diminished.

    Wall Street is on steroids (i.e. – QE2 money)
    Just ask any professional athlete what steroids will do to your physical performance in the short term. The long term effects? – hmm. Not enough research on that. Ugh – gasp!

  • Yes i beleieve most people dont believe the gov numbers anyway. Anyway there is some inflation in u.s now but over seas alot worse. An makes you wonder why? Thats because most of all your tarp money didnt go to banks in usa it went over seas. An the investment with it. The gov had no plan to let the american people get low interest loans with the tarp money, theres no huge inflation here yet. its coming from over seas is my guess. Then all the over seas banks can leverage there borrowed tarp money to bail the u.s. gov out buy treasures. An keep some part of the tarp money to lend out in there country. If i was president now i would of just printed up dollars an let people borrow it from there social secerity fund. An the usa economy would of taken off so fast there would be true inflation here but every body have a job to.

  • Nexus

    I think the opportunity for taxing the rich or not, taxing corporations, trying to balance the budget, etc, has past given the accelerating nature and sheer scale of the debt.

    A solution that avoids massive economic collapse would require great vision. Something that is sadly missing so therefore a collapse of some type is on the cards.

  • People that think we will pull out of this corporate takeover are just denying reality.

    We do need to tax the rich in a fair and equal way including corporations like GE that pay no taxes at all and reap huge subsidies because they are rich.

    The worldwide economic collapse in starting and we are going to see the folly of playing politically correct and supporting corrupt business.

    If business does not want to pay their taxes let them move out, we will create new business in their place. These corporate scam artists are nothing but a burden on the public.

    Fully how both parties do lip service to cutting the budget and then vote for more blood for oil wars that eat most of our budget.

  • PaulF

    Actually the slight drop in unemployment rate is not even minor good news – it’s innocuous. The rate dropped because those “in the labor pool” dropped. So because more people become so discouraged they stop looking for work, the size of the “labor force” (now at all all-time low of about 65% of the population) goes down and along with it the unemployment rate. This is pure *smoke & mirrors*. I am pretty sure that the slight drop in rate was entirely attributable to the labor force “shrinkage”.

    impeachRonPaul is right about wage discrepancies. Look at the ratio of CEO to grunt salaries now vs. 20 years ago. The wealth has been steadily floating to the top. The entire system is completely corrupt and, frankly, hopelessly broken.

  • I wonder why Homeland Security is giving grants to local police and firefighters. Are they getting ready for something?
    Also I am reading ‘Too Big to Fail’, and these banks are doing something similar that Enron did.

  • We better start getting ready. Stock up on supplies. This is going to be like the great depression, but worse.

    I hope for the best, but fear for the worse.

  • Ravi Jacobs

    25 Years ago I immigrated to this country. It was then the greatest country on earth! The dream destination and aspiration of every tech geek and doctor and entrepreneur on the planet.

    Today… I weep for my adopted country whom I love as I watch those who do not admire it, deliberately strangle it and transform it into a sad weak hobbling giant so their perverse ideology can penetrate the grand fabric of this nation.

    Unless patriots who believe in the reason why this country was founded do something other than sing on the choirs of conservative radio and hear our fellow patriots “blah blah blah” themselves into a sense of temporary “feel good”… then we are doomed to watch the Open Society folks and the Unions and the Socialist who ACT AND WALK THEIR TALK… TAKE OVER OUR COUNTRY.

    We cannot be like a couple of drunk “has-beens” at a bar taking a swig while we chat about the good old days of Reagan. The time is today. Its time to unite and act.

    Its time for a massive act. A John Galt like stand. Remember the first passover ? We need blood on our door jambs and massive united action.

    The enemy is among us, they look like us so we must act now!

    Lets call our new movement something Judeo-Christian…. maybe the Passover Patriots ?

  • Dave Cydell

    “All of the measures that the government and the Federal Reserve are using to stimulate the economy are causing tremendous distortions in our financial system.”

    One that comes to mind is the game of Monopoly. Anyone who has never sat down with ten friends and played that grueling board game has no clue what unbridled or crooked capitalism will bring. I am not for taxing the 50K guy to allow Oprah’s fans to sit home and tune in, but allowing someone who is making their fifth million bucks this year to only pay 35% marginal tax is crap.

  • morpheus

    This is the kind of thing that makes me feel really sorry for our country. We are so stupid that the majority of us actually take this number seriously. It makes me want to shake the hell out of every single one of them.

    WAKE THE HELL UP AMERICA! – Join the Revolution – or prepare for the pain.

    Read “Common Sense 3.1” at ( )

    We don’t have to live like this anymore. You will have to Help yourselves.

  • CitizenKate

    The creation of all that fiat money and cheap credit is causing inflation to really take off. Where I live, the price for a gallon of gasoline for my car has increased about 2.7% every week for three weeks. At this rate, by this time in October it will cost about $6.90 for a gallon of gasoline. That means it will cost more than $86 for me to buy half a tank of gas. Our monthly utility expenses will start to increase again right about at that time because of the need to provide heat for our home as the weather cools. We are looking at what we’re going to have to cut in order to afford my work commute. We may have a little wiggle room left in that we could heat our home less and wear more layers of clothing in the cold weather, and air condition less in the warm weather. We’ve got our doubts about being able to cut back much more on food & grocery expenses because price inflation is showing up there, too. We’ve taken steps to hedge against the devaluation of the US Dollar, but it’s going to take continued vigilance to preserve what remains of our financial strength in this very inflationary environment. I know there must be a lot of other couples and families out there that are facing the same things and wondering how they’re going to manage. It’s time to re-visit the techniques and coping strategies people used during the inflationary times we went through 35 years ago, and also the things people did to get by during the First Great Depression. I’ve noticed that people are sharing rides to and from work more, lately. I also see a lot more folks bringing in their lunch at work instead of paying the high prices at the lunch wagon. I salute all you stalwart, penny-pinching, car-pooling budget warriors, sharing rides, carrying your lunch to work in reusable containers, and shunning the designer coffee shop in favor of your home-brewed java in an insulated travel mug. Way to kick butt and take names, and I’ll bet you’re just getting started.

  • the

    I wish this weren’t happening; I wish this weren’t happening; I WISH this weren’t happening… damn, it’s still happening! Well… wishing it away doesn’t seem to be working too well so I suppose I better get back to my preps… Dammit!

  • Another excellent article and well reached!!! For people who want to prepare now, go to this site: and glean all the important information you can!!! Do not delay, it can cost much more than you think!!!

  • Michael

    Good article….One thing I’d like to add:

    I seriously doubt that the economy added 212,000 jobs. This is likely the result of unrealistic seasonal adjustments. Seasonal adjustments are assumptions the BLS makes about job growth because it’s “that time of year”.

    The seasonally unadjusted data shows a whopping increase of 916,000 jobs. This is all due to the birth/death model, which added the same amount. No sane economist can beileve this data. If it were true, companies would be hiring thousands of people and the media would be hyping it. But all we hear about are layoffs. It’s interesting that the BLS has data for mass layoffs but nothing for mass hirings.

    The BLS needs to back this data up by stating the companies that are hiring, where they are hiring, how many they are hiring, and compare it to the companies that are firing. The net result should be approximately equal to the monthly job gain/loss.

  • I cut off the T.V. qnd sent back the washing macchine all due to a teacher’s pay with furloughs that do not enable me to keep up with inflation. Besides, I need to purchase a home and cannot find a lender due to inaccurate reporting on a credit report. Times sure are getting tough.

  • Wobbly-1

    What is amazing is how many sleeping “sheeple” need to turn off the TV, stop worrying about who’s going to win American Idol, how many levels you can conquer in world of Warcraft, and reading meaningless posts on Facebook about who is watching what on cable and realize their little insulated world is about to come crashing down. When I mentions silly little things like the Libya war, the economic collapse, cost of living increases, and how we are basically an economic slave to the chi com’s I get blank stares. People don’t worry about what is happening as long as they have their little world intact. The harsh reality of what is going to happen is going to be more than a wake up call to millions…it’s going to show that these materialist, shallow people who are devoid of any depth of understanding are going to be the ones standing in the “surely the government will help me” lines going, “you have to do something….I need my cable!” I hope our nation can survive.

  • Steve

    Check the link out…it’s worth the watch; especially the last part where the two CNN hosts are put on the spot!

  • Gary2

    Tax the rich and corporations and spread the wealth around to all.

    More demand will = more jobs.

    Those of us who are underemployed (like me) and the unemployed spend everything they get which will increase demand. Tax cuts for the rich do nothing but make the wealth/income inequality worse.

    Tax the rich, tax them hard. Tax GE ET AL. we have a revenue problem and not a spending problem. I think that head start/food banks etc can use the money more than GE can. GE paid a negative 60% tax rate.

    When will people wake up and demand that we tax the rich and corporations and spread the wealth?

  • Gary2

    regarding the UE numbers no one really believes them. Also how many of the new jobs are shitty low pay service jobs? Making these type of shit jobs is not progress.

    Now if the employee free choice act got passed and leveled the playing field more than these shitty low pay jobs could be decent family supporting jobs. These scumbag companies can just make less profit and spread the wealth to all employees and not just the CEO.

  • WonkyTalkie

    Learn how to use a yoyo (yoyo = you’re on your own). Our survival as a person/family/town depends (i.e., dangles from) the pinnacle of wisdom. Get some…get ready…get going! The government grifters will dive down their rabbit holes and cover their eyes and ears when their tactics crash and burn like Ancient Rome. We’re on our own…learn to love thy neighbor before hate rears its ugly head over all of us.

  • Yesterday, I went to downtown, Castle Rock,
    Colorado, a little ‘bedroom’ community half-
    way between Denver and Colorado Springs. I was
    looking for a store to buy my wife a birthday
    gift. I swear, each little ‘mini-mall’ had
    probably twenty-five to thirty-five percent
    vacancy rates: each building had 2, 3, 4 or
    more “FOR LEASE” signs. I don’t know where all
    the people get money to eat at CHILI’s…but
    they’re packed. I DO know of a million-dollar
    property nearby that the people live in but
    haven’t paid the mortgage in 2 years.

  • DMyers

    Whenever I hear an official unemployment or inflation number, I automatically double it, believing my adjusted number is closer to reality. The government numbers are cooked and have been for many years. That means the information we have is not only fallacious but compounded in its misrepresentation by years of accumulated dis-information.

    The charts provided, national debt and money creation, simply make one’s groin tingle with nature’s direst warning.

  • The Beast

    “The 50 states will ally themselves with the Israelites from the hill of Zion, seeking destruction on the face of the earth and glory for the wicked. They call this nation “al-Amarik” (America). Their leaders sit with the son of Isaac and Jacob/Israel. They shout with their slogans. Tribulations envelope the land of America after the Joy spread its wings of pride and the worlds flow the pleasures of the world to it. The Devil plays with joy in its cities and alleys, gathers its parts and wreck havoc all over the Land. The religion of the Devil is shown upon the dwellers of America, with it are lust, arrogance and mirages at dawn for the thirst of worldly lives. They engulf themselves in lust, pleasure in prosperity, and satisfaction of their science. Their affairs are under the hand of evil rulers, and they are guarded by armies that have never won. They seek only the worldly live, whom they after with all they have. They rule all corners of the world. They know the navigation path of the world, its width and length with great details.
    They have eyes above the clouds, and ships in the oceans like sails. In those ships they keep the fire made of soil and water, fire that scatters and spreads, that is being launched by machines like towers of castle with flames beneath, destroying civilizations. With that they threaten the weak in this earth.” (Ali bin Abi Thalib on the prophecy of America, from the book of al-Jafr)

  • The laws of physics, thermodynamics, chemistry, life all conclude this way: there is degeneration then death. The best we can do is prolong a good heathy life and enjoy slowly and responsibly. A logarithmic progression is not sustainable and will accelerate to infinity at some point. You have all added very intelligent ideas but some think we can sustain the vision of our godly forefathers. I don’t belive that’s possible. To quote an Old Testament scripture, “Without a (common) vison, the people go wild (perish, unrestraint, chaotic).” and “My people perish for lack of knowledge” and “the fear (reverence) of God is the begining of knowledge.”

  • William

    Most in America have no idea just how “spun” the mainstream media is. The “news” is warped by the choice of WHAT to present on the national media outlets, and HOW it is presented. Look at the lying spin dedicated to having the US conduct ANOTHER unnecessary war of choice for the benefit of Israel, this time against Iran. If Americans can not see through these LIES, they are truly braindead. From Eisner to Hiatt of the Wash Post to Immelt to Sulzberg to those in charge of CNN, and CBS, it is all scam, all the time. Just ask Wolfowitz, or Perle, or Feith or Miller……or Charles Krautpliars.

  • Most financial advisors don’t know their backside from a hole in the ground. They simply spout whatever the company has to sell to make them the most commission. Times are going to be tough for everyone no matter where you live.

    We help Americans find jobs and prosperity in Asia. For details, visit

  • Yes, America is a bunch of liars just like everyone else on the planet, and we learned it from the experts, the leaders, but nothing like this century.

    So in a nutshell, the unemployment, food stamps, profit and losses, are all a good percentage of “sanding”.

    The QE is an overdose of probably a huge inflation in percentage in America, but the closed FedReserve has been pumping illegal legal money unaccounted for into foreign veins.

    What should be obvious, is they are addicts, and repeat cycles, on an exponential scale, so how America was absorbed into the insanity after the great depression, leveraged into WW2 due to that withdrawal to international swindle repositories, so now the Fed is but one tentacle rigging the globe, which is now incidentally based on this purposely created rubbish.

    See the pattern? A global absorption of wealth, in distressed real assets, pumped with fake assets, repurchased with a treasure trove of options of more financial assets, for pennies on the pound.

    Sorry for spoiling the end of the movie for you. Thought you might like to know what the plan actually is, global depression based on the USDollar.

  • iooo

    most americans brag about gas , in eastern EU regular gas right now is 1,7 dollars a litter or 6,5 dollars a gallon while in US is 4 dollars i think EU should really cut some taxes soon it’s not fair for us to pay a lot more than the americans i understand to tax oil when is cheap so people don’t do the stupid thing of buying an suv but when it’s over a 100 dollars a barrel taxes should go down and let the rest of the world take some of the burden EU can’t save the world by itself with more economic cars ,if we cut some taxas gas could be 5 dollars a gallon we are cutting our growth and for what? for more austerity measures? i’m so amazed by people beeing so gloom in america, if you the center of the empire don’t have it good who has it man? i read about outsourcing and other countries like China stealing american jobs but you US stole a lot more jobs from the whole world with agricultural subsidies, if poor countries can not be competitive and export food they will not get industry and so on ,so i think US stole a lot more jobs than they’ve lost in the last 15 years an the jobs that will be lost in the next 15 years ,peace man and don’t be so gloom there are at least 6 billion people on this planet that are poorer than you .

  • Homer Otto Goodall, Jr

    Quit being a globalist and look what is really happening. I don’t care what the assholes in other parts of this planet are doing. Watch the economy and see how it collapses. Food so expensive that someone on fixed income must choose between medicine and food or Dog Food. That is right people are eating dog food.

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