The Stock Market has been rattled in the last week, but the media is being silent about this. Up until last week, the media was triumphantly proclaiming the economy is booming. Some media analysts even claimed we are experiencing an economic golden age and that we are in an era of unprecedented prosperity. Their proof was the booming Stock Market, but the propagandists did not tell the truth for the run up. Ben Bernanke and the Federal Reserve has been buying 80 billion a month in mortgage back securities from the banks. This has kept interest rates low and incentive the banks to invest in the stock market.
This money printing based equities boom has not benefited the average American. Food and fuel costs are high, due to a devalued currency, thus lowering living standards. Yet the media ignores this and continues to push the economy is booming. Printing money is not leading to real prosperity, despite the propaganda.
WASHINGTON — We are now discovering the limits of cheap money.
For more than four years, central banks around the world — led by the Federal Reserve — have aggressively pumped money into their economies to stimulate faster revival. These infusions are huge. From 2007 to today, the assets of major central banks nearly doubled from $10.4 trillion to $20.5 trillion, reports the Bank for International Settlements (BIS) in its just-released annual report. When these assets (bonds, mortgages and other financial instruments) are purchased, the sellers receive cash. The outpouring of cash aims to lower interest rates, push up stock prices and real estate values, and restore confidence and stronger economic growth.
The most charitable verdict on this massive monetary experiment is that it’s done modest good. In the United States, it did reduce long-term interest rates and, to some extent, bolster stocks. Even so, the speed of the U.S. recovery (about 2 percent annually) is roughly half the average of all recoveries from 1960 to 2007. As for the global economy, it grew 2.5 percent in 2012, down from the 3.7 percent average from 2003 to 2007, says IHS Global Insight. Few major countries are doing better now than before the financial crisis. Cheap money hasn’t been a smashing success. Still, when the Fed suggested last week that it might curb bond-buying later this year, stocks swooned.That’s one downside: Cheap money is hard to reverse gracefully. The larger problem is that central banks are trying to do things beyond their powers. Says Stephen Cecchetti, the chief BIS economist: “Monetary stimulus alone cannot put economies on a path to robust, self-sustaining growth, because the roots of the problem preventing such growth are not monetary.”
The easy money policies of Ben Bernanke are not benefiting the average American. But that is not the narrative the media is portraying on a nightly basis. In a page out of Soviet propaganda, they claim the economy is good and prosperity is spreading. These lies will be exposed and the results of QE will be a disaster.
Here is an article claiming the economy will boom in 2014.
When will America’s economy finally stop limping along? 2014. That’s what a growing number of economists are predicting.
Things have been grim since the recession officially ended in June 2009. Job creation is barely outpacing population growth, and our GDP growth is sluggish.
But next year, economists foresee a convergence of several factors that could finally kick this recovery into high gear.[….]
Just how good? Steve Blitz, chief economist at ITG Investment Research, thinks GDP growth in the 3.5% to 4% range is possible for 2014, if the global economy doesn’t deteriorate. Monthly job growth could peak in the 300,000 range, he believes.
Blitz anticipates a large numbers of Millennials entering the car-and-home-buying stage of life, giving an added boost to the economy. Plus, the drop in defense spending associated with the draw-down of troops from Iraq and Afghanistan should be largely behind us.
I wonder what will be their excuse next year if this growth does not materialize.
