Even more proof the secular inflationary cycle has ended…

Via the team at Zero Hedge

http://www.zerohedge.com/article/guest-post-dear-prudence-wont-you-come-out-play

Read the entire post and look at the graphs. This is just more proof that traditional monetary policy has lost traction and that government is “pushing on” the proverbial “string”.

Important excerpts:

It should be no surprise to anyone that household debt outstanding fell again in 2Q (the latest Fed Flow of Funds data), making this now three quarters in a row of household net debt contraction.  The important character fingerprint in the 2Q period being that debt contraction at the household level accelerated. [...] Household sector credit contraction is a first in post War history (emphasis added).

[...]

If households are paying debt down, then something has to be given up for that balance sheet reconciliation decision.  And the give up is consumption.  Although you may not realize this, and this is clearly one of the key reasons why the long tenured Street truism suggests no one bet against the US consumer, personal consumption in nominal dollars has actually increased during each and every recession of the last six decades (at least).  Each and every recession until the present, that is. [...]  Lastly, we believe it’s also important perspective to remember that in our current circumstances, households have been treated to some of the lowest interest rates of a lifetime and consumer product price weakness has been pronounced.  Yet still zip in terms of consumption gains 19 months into official recession territory.

 

All I can say, is that you should be accumulating gold and silver bullion.

 

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2 Responses to “Even more proof the secular inflationary cycle has ended…”

  1. David W. Lincoln Says:

    I was re-reading “Jews, God & History” by Max Dimont, and I came across this definition of capitalism: In an economic sense, capitalism is generally regarded as a specific application of wealth to create “surplus wealth,” which is used in the creation of further wealth among certain established principles. Such capitalism depends upon the existence of a free wage-earning class, mobility of labor and capital, free markets, international law, sanctity of contracts, availability of credit, negotiable securities, and liquid wealth.

    The fiat monetary system, Guido that you correctly deride, does not measure up so well to that definition of capitalism.

  2. David W. Lincoln Says:

    Roubini weighs in: http://www.ft.com/cms/s/0/9a5b3216-c70b-11de-bb6f-00144feab49a.html

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