Growth is Dead – Fed’s in Trouble

Going to be ugly in the markets today:  Seat-backs and tray tables to their upright and locked position.  Seatbelts fastened tightly – it’s going to et bumpy.

First time jobless claims were a little better than expected, but that’s not going to help much.  Producer prices were up 4-10ths of a percent – too much and inflationary.

Once you feel secure, put on your thinking cap with us.  We’ll try to understand WHY the market is about to crater.  40-thousand foot view?  The reason is the Fed’s outlook report Thursday.

Essentially, the Fed essentially admitted:  No growth, contracting economy, and a real “bad scene” for the next three years.  This will take some explaining and contemplation to sort-out.  We begin with their summary of what’s ahead:

For reasons we’re not clear on, the Fed went to great lengths to point out: “The December projections were made in conjunction with the meeting of the Federal Open Market Committee on December 10–11, 2019.”

mea culpa, perhaps?  Blame the pandemic?

Big Picture Now

Before our line-by line analysis, let’s consider the massive structural changes – strategic view – of life, the economy, and knock-on effects.

  • The world has “run out of growth” prospects.
    • We have resorted to monetizing minutia: the weather, gender, race, orientation. Everything else is taken.  (Can I develop an app for you? LOL)  Hot-button pressing is “in” since we have no hot new tech driving real growth.
    • Consumer super-saturation has arrived in consumer goods – even the storage units are overflowing many places.
    • Financializations are on the rise:  Companies have pressed up stock  prices by simply buying-back their own stock.  This has distorted the markets.
    • Because we’re AT a global longwave economic peak, the Fed has been trying to “print across the peak” by creating money at a greater than 50% annualized basis.
    • And this has funded stock operators running the market up to dizzying heights…
  • The Virtuous Cycle is Ending (or HAS)
    • In a virtuous cycle, one growth area ripples out to reinforce others.
    • Its “evil twin” is the vicious cycle.  Where one collapsing sector takes down others.
  • Global Consumption has Radically Shifted
    • The Work from Home model was imposed by CV-19.
    • Future of commercial real estate is shakey.
    • Rural could be the new growth area as LEO satellites bring fast wi-fi everywhere.
    • Online e-tailing has creamed brick and mortar.  Shopping malls are in collapse.
  • Depression Looms
    • This is not “just another recession.”
    • The economic calamity is not political, either.
    • It is systemic…

All comes down to the built-in asymmetry of the U.S. Capitalist Model:  We kick-ass and rock the planet when faced with shortages.  Shortage drives opportunity, you see? As long as there is growth, we can smoke  anyone.

The downside is our economic model collapses in a heap at zero – and worse, God forbid, negative  growth rates.  Gives us a chance/window to “go Venezuela.”

So the Future?

There are only a few ways out of a longwave economic collapse.

  • Hyperinflation 
    • The Weimar Republic Model.
    • Reduces value of savings to zero.
    • Reduces load of public long-term debt.
    • Screws investors.
  • War Model
    • Most wars are the result of economic drivers.
    • WW II was the ending of the Great Depression.
  • Deflation – Downscaling
    • The post 1929-1937 period contained both a primary Depression (centering in 1933/34) and a secondary Depression (centering 1937).
    • That Depression might have continued with lower level lifestyles except WW II was an economic and technological change point
  • The Hybrid Model  (New idea!)
    • Fed takes a little this, a little that
    • May or may not work
    • May or may not avoid the War door out…

Seems to us, the Fed is trying a “mixed bag” approach.  First, letting the CV-19 virus take care of the downscaling/deconsumption part of Depression.  Then, by hyperinflating on the backside.

Feeling better, now?

1929 2021 Restated: Line Item Discussion

GDP first:  The forecast of a -6.5% US GDP this year is, in my view, totally insincere.  The reality is the Fed is making up money at (depending on which metric you choose) 30 to 85%.

We have always admired the work of John Williams of and his estimate of M3 (reconstructed) places inflation of money at the broadest level.  Somewhere in the 25-30 percent range now.  That’s likely to grow as we spend our way toward Oblivion.

The questions that don’t get asked at the Fed Chair’s press conference disappoint.  Unless I missed it (having gone to the coffee recycling station) no one asked if the GDP forecast was on a current or constant dollar basis.  All assume “real GDP.”

This is the 800-pound gorilla.

While the Fed says “Note: Projections of change in real gross domestic product (GDP) and projections for both measures of inflation are percent changes from the fourth quarter of the previous year to the fourth quarter of the year indicated…” they don’t address shortcomings of “real GDP.”

“Real GDP” is not precisely the same as constant dollars.  Think diffusion.   Blair Fix and Johnathan Nitzan address this in a 2019 paper “Real GDP: The Flawed Metric at the Heart of Macroeconomics.”  Particularly cogent as they put forth in their abstract:

“We argue that real GDP is a deeply flawed metric. It is presented as an objective measure of economic scale. But when we look under the surface, we find crippling subjectivity. Moreover, few economists seem to realize that real GDP is based on a non-existent quantum-utility. In light of these problems, it seems to us that much of macroeconomics needs to be rethought.”

Yeah, now they’re thinking…right?  But there’s more…

Additional Flawed Metrics:

The same problem (as what kind of dollars are we counting?) is evident in the discussion of PCE and Core inflation.  Their guidance here is:

“PCE inflation and core PCE inflation are the percentage rates of change in, respectively, the price index for personal consumption expenditures (PCE) and the price index for PCE excluding food and energy.”

Yes, but are these inflation adjusted constant dollars or are these in Nuevos Centavos de Fed – as the printing presses work overtime?  If it’s the latter, then your lifestyle will be (pardon this) in the shitter by mid-2021.  And that’s Regardless of Who Wins the 2020 election.  Its so dicey, I think we can already claim “No One Wins” in 2020 because they will preside over  a Depression and march to war.

Remember, even so-called constant dollars get things wrong over time.

Further Fandanglery

Economics – as you should be getting clear on – is a crooked business at its core.  Definitions and conditions rule.  UNLESS you take the time to read what are, effectively in this outlook, the “Notes to the Financial Statement” before you look at a single claimed number.

Take the further fandangle (def. 2) is evidenced in the unemployment outlooks put forth. Here’s their footnote on employment forecasts:

“Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.”

The fandangle?  Well, the Fed goes by the rate of inflation.  As we have discussed many times previously, the rate is crooked because it’s based on the estimated size of the workforce.  NOT on the absolute number of people gainfully working.

Seriously?  Know how you reduce the “unemployment rate?”  You make the workforce smaller.  Of course this is an absurdity, but check out how its already being done.   I just pulled this from the Deptment of Labor database:

See the yellow highlights?  The Labor Department figures 6.329 MILLION people just disappeared from the workforce in five months Well, can 6-million plus influence (NSS!) the apparent unemployment rate?  Yah think?

What we’re reduced to is some simple inferences.

Total number of people working  January of this year?  131.099-million.  Last month (May)?  116.523 million.  Total number working is down almost 12 percent.

Yet, the Fed is pumping out money like mad to support “the way we were” in many overbuilt, out of purpose industries.  And it will all come back to bite on the ass those of us who are still working through higher taxes.

Jeez…enough, already.  You get the picture:  Everyone has numbers and they’re all suspect:  Like we’ve said for years, though:  If you don’t hold it in your own hands, you don’t own it.  NOTHING – ANYTHING.  Not even the truth.

The world is a crooked place and thanks to the Digital Uprising, complicit liars in both political parties, and squandering of resources – not to mention this “everyone has to finish the same” regardless of effort put forth mentality…I guaran-frigging-tee that there’s no “happy ending” in sight.

Revenge of The Fractal Economist

Wednesday of last week, a long-time friend of this site – The Fractal Economist – (who in real life is an ER doctor) – sent in a warning of what he sees going wrong in here:

 “89 Year US Third Fractal Nonlinearity … With trading halts, Thursday 4 June 2020 will be the longest day (trading day … denominated in 8 …. one hour units …)

I opined at the time I thought he was a week early.  But this morning…does this look like fractals are worth considering?  Futures 2-hours ahead of the open:

This will bounce around as the Fed hands out free money to “arb things up” and pretend this is an “orderly sell-off.”   

Meantime? A green star today to the Fractal Economist for getting “close enough for home use.”  We assume the market will soon-enough see the financial analog to one of the ER doc’s tools:  “QuikClot…”

Need More Scary Stuff?

You really know how to push things, don’t you?  Early futures lead here:

More for Peoplenomics subscribers Saturday, but for this morning the “line to watch” will likely be the bottom of the lower trend channel at the market close today.

And In Other News

Not that anything else really matters while your pension and life savings are running into big headwinds, but here’s what the MSM is peddling:

Trouble in FAANG Land: EU Beats DOJ To The Punch, Brings Antitrust Charges Against Amazon.

Defund the Police – Payback time: Minneapolis police withdrawing from union negotiations.

No hurry to move? HouseCanary Market Pulse: Weekly Contract Volume Remains Healthy While New Listings Continue to Lag.  Elaine and I just had this conversation:  Why leave paradise to live small and among the crazies?

Another example of PC-BS…or is this P-CBS? New “Looney Tunes Cartoons” take away Elmer Fudd’s rifle.  Defund and disarm…urban drug lords got’s to luv it, yo…  Wait.  hey CBS…do drug lords by advertising?

And our CV-19 forecasts are higher:  While CDC Expects 200k COVID-19 Deaths By October As Dreaded ‘Second Wave’ Arrives: Live Updates, our outlook says the US could pass the 200k dead level well before Labor Day…we’ll see who’s right.  My money’s on…me.

ATR (Around the Ranch)

Another cool morning down here…temps in the low 60’s.  No sign of global warming yet.  I’m sure if I could gin up a way do a climate hustle, I could get rich.  Dumb me, we just sequester carbon on our tree farm. And run heavily on our solar. No real money in that.  Being a demagogue is a much higher paying gig.

Oh, no word back from NOAA (this will make more sense to PN subs) on our inquiry over the conflicting data on the solar cycle progression website.  I sent the inquiry to three or four NOAA types.

Only one answer so far:  “I will be out of the office today, 06/05. If you need immediate assistance, please contact…” (blah blah blah…)

Jesus…I should have gone into government “service.”  Big pension, lots of time off, power…rub shoulders with the demagogues…tax the sheeple….

Oh well… You do remember who told you all those Fed interventions in free markets would likely ONLY BUY Time – not price, right?  Time’s up today.  Fractally forked, I believe would be the polite way to say it.

Write when you get rich (or the world gets over manic),

30 thoughts on “Growth is Dead – Fed’s in Trouble”

    • I had the same problem yesterday, but I can read yours today.
      Also some of the chart boxes are invisible, like the first one today.
      Is Brutus in the server room?

      • you must be using google chrome.. KIKI…on google chrome you cant even see the daily post.. it was the same on firefox and safari.. I had to go back to an older version of Microsoft… windows ten wasn’t working very well either.. I am using an older version of windows and on the Samsung internet browser.. on the phone..

  1. I don’t know if its Hughesnet, but none of the graphs and pictures are working on today’s post.

  2. What chu talkin bout Willis?

    Its all “peaches & cream” in the markets mi amigo.

    Why U can buy deadass broke HERTZ rental car company stock for under $2.00 today!

    Never mind that this was under a $1.00 only a week ago after filing for Bankruptcy.

    No Renters, thousands of new Vehicles standing idle while Debt keeps piling up on the corp balance sheet – brilliant lets bid this stock up to $5.00

    Why George – J kerPOWell & Co have driven FEDERAL DEBT Levels to now historically high levels. According to Treasuries own stats – Fed Debt just went from $25 TRILLION on 5 MAY 20 to $26 TRILLION on 9 JUNE 20 – fastest we have ever added a a QUICK TRILLION to the National Debt.

    It must be time to buy more stock – how about a Triple Bull ETF, or some that cheap HTZ stock.
    or better yet – why not some CHEAP Real Estate in Seattle..antifa is looking for some help/support in their new role there as city leaders.

    How does – Long Index Puts, Long Precious Metal Miners&Streamers, Long VIX look this AM ? even a bling squirrel finds a nut once in a while..

    Ans: not too shabby..

    “lucy” may have the ball on the 10 yd line – but he is turnover prone – my monay & SUPPORT is on the D! D-Fence!

  3. I’m trying to put together meaningful data on ad driven spending. I’m looking to split this between, traditional (TV, newspaper, etc.) and online driven add spend. I’ve had a theory that this will be / has been a leading indicator for some time, of where the market it heading.

    Stay tuned. Lots of this seems to be buried in the weeds.

  4. “Blair Fix and Johnathan Nitzan address this in a 2019 paper “Real GDP: The Flawed Metric at the Heart of Macroeconomics.”

    Dam.. I haven’t read that one.. thanks for sharing George..

  5. “CV-19 forecasts are higher: While CDC Expects 200k COVID-19 Deaths By October As Dreaded ‘Second Wave’ Arrives: Live Updates, our outlook says the US could pass the 200k dead level well before Labor Day…”

    Medical Bills…. consider this..
    I know someone that got a bill.. for being tested for the covid.. and the bills for his mother being hospitalized and treatments.. seems that the virus or the tests to see if you have the virus are not covered under medical insurance.. his bill for the test just shy a grand.. his mothers bills he didn’t reflect on what his father has to kick in for it..
    so.. With this new tidbit of knowledge..will people be rushing out to be tested.. a trend before covid when your discouraged to visit the clinics.. was to wait till you get so sick that you go to the ER the clinics solution to the uninsured… people rather than get help before a situation is bad enough now wait till they are definitely sick enough..
    will people be seeking out assistance or try to self medicate to keep from having to go bankrupt over being sick..

    • “go to the ER the clinics solution to the uninsured…”

      the doctors at the clinic are really stupid to though.. LOL I had a lengthy debate with one doctor that hated the uninsured and didn’t want universal healthcare.. yet even though he refuses to see anyone without insurance.. he sends them to the ER.. where he RENTS his clinic space from.. at what was it then three hundred a square foot.. plus his nurse.. and the benefits paid out.. its just stupid.. the supplies etc.. the income can be quite lucrative but so are the costs associated with clinics..
      If he would have just stopped and looked at it.. think about it.. he would see.. what gets me Is my sister won’t talk to me.. because she thinks I am to liberal LOL she showed me an ad of a doctor that was going to jump the ship.. excuse me.. granted the grocery store is willing to let him sack groceries or stock shelves and I am sure with his education he can flip burgers to.. but the income isn’t the same.. and where would he go.. to another country where they put caps on income.. give me a break.. the guy in the ad was an actor and it was put out by a lobbying firm a real doctor my not like having one in three uninsured and unable to pay the prices.. but that one in three is also why the rent keeps going up and an aspirin is so expensive.. ( thirty nighttime Tylenol for a geriatric patient 25 years ago was four hundred and ninety five dollars) .. I told her to rebel and quit her job LOL show them how she loves it..

  6. Damn good column this morning George not one mention of lib’s or commies,capitalism which is an animal that always has to feed on the profit is now starving, as there’s little to no profit left anywhere in the world.I’ve always been a strong supporter of unions with the exception of those in the public sector,they need to be abolished as politicians use them as a way to get into office.I read an article on pensions of those in the public sector and I believe New York is the only state where us taxpayers are on the hook if the public pension run’s out of money.Found I have to refresh the page two or three times to bring up the coments…

  7. <b?FYI: on new articles/comments not showing up.

    Press and hold Shift then click on the Page Reload icon which is usually a circular arrow in the upper right-hand corner of your browser. This’ll force a reload of the page, ignoring the current browser cache.

    Even if you have checked an option to load fresh data on each visit to a website, I’ve noticed some websites, this being one, needs a “manual refresh” to get all of the new data.

  8. As a functional pilot, I figure you will appreciate the significance of this:

    It makes me so angry that all I can do is sit and sputter. I am not a pilot, never been in control of an airplane, just a passenger. The closest I can come to piloting is being in control of a motorcycle at speed. Big road bike on a cross country course. Never served on a carrier, the closest I’ve ever been to one was across Mayport Naval Harbor. i was Coast Guard, an icebreaker, no more than the captain’s gig to the big guys like that.

    i will concede that the “average” person has no concept of a carrier landing. And the described landing is well away from “standard proceedure” for commercial use. But the observer’s view might well have been one step removed from a wheels up landing. To take offense at one (possibly) shoddy landing and hold a class of pilots responsible is nothing more than insanity. I cannot express my anger and disgust at the auther.

    I comment indirectly about the city giving up a reserve in their midst. Just as someone is “insulted” by a hard landing. Perhaps they should fly into Yap International airport where the customs shed was topped palm trees with “nipa” dividers for walls. Or perhaps Truk International where the runway ended at the lagoon. By the way, there was a crack in the runway at some 35%. A 727 had to use 120% reverse thrusters and brakes to stay on the runway.

    A good landing is one you walk away from. Need I say more?


    • As a pilot and engineer, it seems that there are two problems here. The navy pilots are often trained on difficult carrier landings where the runway as well as the aircraft are moving in sometimes difficult and unpredictable ways. Slam it down and stop makes sense on an aircraft built to withstand 12 g’s. Commercial aircraft can’t take that kind of strain, but having accountability for the actual g-force at the main gear attach points would make sense. One number for a warning and another one for suspension. High g landings can be justified in gusty crosswinds or emergencies.

      The other “problem” is the actual pilot doing a preflight. A pilot in command is responsible for the preflight, regardless of who does it. I see nothing wrong with the pilot checking the work of whoever might have been assigned the job. Others might disagree. There might actually be good reasons for the separation of responsibility, but I’m not aware of them.

  9. Fudd without his semiautomatic double barrelled 100-round capacity Shotgun? Unthinkable Only ran out of buwwets in one cartoon, if memory serves… and then there was a gun safety lesson because there was BAM!! one buwwet left.

    Damn shame. Those guns were just as cartoony as all those weapons of mass des… uh…. sticks of Acme Dynamite.

    Will Wile E Coyote now be buying his anvils, et al, from Acmezon, now?

    I won’t be watching them.

    And when it comes to matching BB & EF & classical music, NO-ONE could hold a candle to the late, great Chuck Jones. Bar none. For those of you underprivileged folks who are unfamiliar, find Rabbit of Seville, and most of all, What’s Opera, Doc?

    • Tristan and the Ring Maidens .
      In the Opera it sounds like “toyota -ho”

      In Whats Opera, Doc? its Elmer signin “Comeouttathehooole’ one of my absolute all time favs!

      Thanx for reminding me – brings a smile to my face every time.

      • And, credit where credit is due: Raise a glass to the superlative vocalist Mel Blanc, who did all the singing – on key & in character!

    • Unfortunately none of the modern re-creations of writing and art work for cartoons hold a candle to all the ones done up until the late 60s. All the pratfalls, highjinks, practical jokes and exploding food stunts have all been played out for us older generations.

      I remember years ago one of the Tom and Jerry writers or producers or something was trying to talk up the new productions of the cartoon on a talk radio program but everyone calling in pointed out that the new ‘toons just weren’t as good as the old hand-drawn ones. No matter how the interviewee tried to put a happy face on the lower quality pictures and toned-down “violence” he just couldn’t catch a break from the people calling it.

      I guess I’ll just have to start downloading all the ‘toons I can off of YouTube to preserve what was. I find myself doing that so much more now days. Even “Plastic Fantastics” were better back in the day than they are today. People of my age and older have to realize the fact that we lived through what was truly the best of times and that it’s downhill from here on out. The only way to get back to what was really good is to go back through the worst of the Great Depression and depths of WWII. Times like that are the only thing that makes people appreciate and discern what’s good and right in the World.

  10. SO SORRY, for the OT subject, but today is my birthday so maybe G. will allow the indiscretion.

    During her birthday wish on the phone just now, my 25 year old daughter asked me about a video going around F..kb..k and >> if it was legit, why it wasn’t all over the news ?!?! Since she knew I had all social media blocked at my router she sent these links via email to me. She couldn’t locate the video anywhere else, but did find a Spanish site with the case defendants listed.

    What say the edumacated amongst you?

    Ya think SoCal might just go the way of bldg 7 ??

    • Testify..Gosh I don’t recall… It was a long time ago..
      If you have the alphabets destroying or playing the three card Monty for you.. you don’t have to worry at all..Its not ever going to happen the power and control behind all of the emails has to be immense ….
      that isn’t even taking into consideration the people that have been mugged or had a bout of depression..
      The only one that hasn’t committed suicide yet is assange.. I still think it was an one on the team for investigating them that released the email’s.. seen how deep and dark it ran and knew that nothing could be done about any of it.. so send it to assange at wikileaks..

    • the good and bad of that Scott.. is I don’t have the google ad’s either.. which I kind of enjoy.. I love to play with google ad’s.. you can get some pretty cool ad’s coming up.. LOL.. it all depends how google interprets the browser history..

  11. anyway nothing has changed .. short short short everything . the yellow one ? leave me alone .. hyperinflation with zero rates? listen how about all the gurus take a patriotic rainpill .. aint nothing gunna save whats coming .. be a capitalist and a humanitarian .. it is possible .. and read rayard kipling every morning.. take profits on monthly , yearly oversold spots .. then wait for the ziopatriot hippies , old snake oil guys to start blabbering . or cnbccussa to tell you its different and spray em again .. love capitalism love humanity

  12. Images load in Edge but not in Firefox. Doesn’t seem to be a security/privacy issue. Only affects images embedded in the page. Header and Kitco jpg’s are OK. I hate Edge, but now I have one Edge shortcut, sigh.

  13. Yeah, I’ve got no images in Mozilla, either.

    Chrome doesn’t even show the placeholders.

    I can’t access any of George’s websites with my ancient Opera 10 (the security pukes), but I CAN access the images, using HTTP (port 80, not 443) and site address ONLY. I accessed the first image at:×450.jpg

    Trying to access that image in either Mozilla or Chrome gave me:


    Websites prove their identity via certificates. Firefox does not trust this site because it uses a certificate that is not valid for The certificate is only valid for the following names:,,,,,,,,,,,,,


    and would not let me override.

    George, I’m guessing you have mixed-mode pages, where you have a mixture of secure and not-secure content or URLs, and our crap “modern” browsers don’t know how to handle them. I could hack my Opera 10 to access your whole site, but that wouldn’t help anyone else, and frankly I just don’t want to “richard around” with the code of a 12yo browser.

    I don’t know if fixing a security mode-mismatch will fix the “refresh if new content” issue we’re all having with pages, or not. Speaking of, before I refreshed, your landing page showed 12 comments for this column. After I refreshed, it showed 18. H o w e v e r, upon coming to this page, the page itself reported 12 comments, and the six more the landing page “knew about” after being refreshed, didn’t materialize here until I refreshed this page, also.

  14. I cant believe nobody has commented on the obvious. The whole thing is going to collapse. Time for a jubilee . CAN YOU ALL LIVE THROUGH THE RESET. Stop worrying about the stock market, the price of housing and so forth. Do what you need to do to survive the crash. The complete reset. Has that sunk in yet. George is ready , I am ready, what about you? You have been warned. now do something about it. Zenny

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