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The US Federal Reserve, which has been the life-support for the U.S. economy
(for better or for worse), is finally discovering that its policies and theories don’t actually apply [in] the real world….This means that the primary prop underneath the U.S. stock market and financial system (namely Fed intervention) is slowly being removed. What follows will not be pretty and smart investors should be taking steps now to prepare in advance. Words: 350
So says Graham Summers (www.gainspainscapital.com) in edited excerpts from his original article*.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Summers goes on to say, in part:
The U.S. economy is showing major signs of deterioration:
- The jobs data, even after the BLS massages it, is awful,
- 1Qtr 2012 GDP estimates have been revised lower,
- two consecutive Philly Fed surveys have been bad,
- the average workweek has shortened for two months now,
- there has been a drop in the Empire Manufacturing index and
- many major companies have cut their forecasts for 2012.
Take Note:
In simple terms, we’re getting many signals that the U.S. economy may in fact be slipping into a second recession in the context of a greater DE-pression and once it’s confirmed…(we already are, but it won’t be confirmed by Government officials until after the US Presidential election) then this will mark:
- The first time in the post-war period that the US has entered a recession in which industrial production failed to exceed its previous peak:
- The first time the U.S. entered a recession when average unemployment duration was already at record highs:
- A time where the civilian employment-population ratio is at levels not seen since the ’70-’80 (meaning that fewer and fewer Americans are in the workforce).
- A recession in which food stamp usage is already near record highs:
To make matters worse, as the Wall Street Journal reports, “Fed officials have been frustrated in the past year that low interest rate policies haven’t reached enough Americans to spur stronger growth, the way economics textbooks say low rates should. By reducing interest rates–the cost of credit–the Fed encourages household spending, business investment and hiring, in addition to reducing the burden of past debts but the economy hasn’t been working according to script.”
*http://gainspainscapital.com/?p=1873 (To access the above article please copy the URL and paste it into your browser.)
Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
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