Chickens Will Roost

Looks like the chickens are coming home to roost.

The policy makers’ global War on their respective nation’s savings by looting it via monetary policy (money printing and credit from thin air), taxes, confiscatory low interest rate policy, etc. is the equivalent of raiding the seed corn and mixing it in with the harvest. Economic and market participants are hoodwinked into believing the harvest (e.g. GDP) is healthy, when in fact each real harvest grows leaner while the amount of seed corn required to be raided so that policy makers and their bedfellow politicians may keep up appearances and sustain the status quo, grows.

Everything seems normal to the layman operating in the economy, yet the policy is a functional a dead-end road off the cliff to economic famine.  Once your savings are so badly degraded and rearranged into malfeasance — bubble activities that will collapse, reckless credit and other investment choices “reaching for yield” like those chasing dividends in the U.S. MLP market  — and a host of other poor economic decisions / activity, the “harvests” can only collapse.

As for measurements, and even as paltry as it is, GDP is a stupid number. It grades any economic activity regardless of how wasteful or purely consumptive it is as an A+. The quality of the U.S. GDP has been terrible, as has been the quality of job growth, the latter further rotten by the lack of participation among capable working-age adults and the reality that said job growth has been driven primarily by the age 55 and up demographic.  Meanwhile the 26-55 has declined, all amid horrendous wage stagnation for all involved. As well, one only need look at the ballooning default ratios on college student loans that coincides with the abysmal job prospects for those age 25 and under, at near record unemployment, to see how unhealthy this “recovery” has been.

The policy makers’ only option at this point to preserve the political and financial elite’s position is to continue with extend and pretend = more looting from those on main street and funneling it to Wall Street / Washington D.C. — the latter, by the way, the fastest growing demographic of 1%ers. Looting pays, the rest of us suffer.

This will work as well as giving more heroin or meth to a failing junkie who is struggling not to OD.  Oh, the high feels good and, boy, the itch is scratched… But at an inevitable, horrific cost.