In the below article, Zero Hedge published one of the most alarming – and damning – charts imaginable, regarding the outlook for the dying American “empire”…
The Great Unrotation in US GDP
Specifically, it plots the U.S. 10-year Treasury yield against nominal GDP over the past 53 years; depicting a peak in “nominal GDP” during the nation’s most poignant inflation spike since the Civil War (in 1979); and in 10-year Treasury yields a year later…
Since then, the nation’s economic undulations produced a choppy data series; with the worst declines occurring in the early 1980s – following said inflation spike; the early 1990s, following Bush I’s “read my lips, no new taxes” proclamation; the early 2000s’ “tech wreck”; and, of course, 2008’s Global Meltdown I.
Irrespective of these cyclical changes, the long-term secular trend has been decidedly DOWN – with no end in sight. This UNSTOPPABLE progression was unquestionably exacerbated by the outsourcing of manufacturing overseas; partly due to suicidal trade agreements like NAFTA and GATT; partly currency manipulation – enabling Eastern nations a significant cost advantage; and the rest – simple, honest competition.
Aside from these issues, one can’t discount the “coincidence” that U.S. economic strength peaked just after it abandoned the gold standard in late 1971. At that point, the ENTIRE WORLD adopted a fiat currency regime – in which emerging manufacturers gained the lion’s share of global “business”; while declining empires like America focused on “imaginary production” (housing, banking, etc.) via the manipulation of government printing presses.
Unfortunately, the law of “DIMINISHING RETURNS” works quickly; and within a decade, the false growth profile considerably weakened. Four decades later; amidst a Federal Reserve-generated annual inflation rate of 7%-8% – and rising – nominal GDP is no higher than in the 1960s!
Worse yet, all key indicators of economic activity are in FREE FALL –globally…
…and thus, America’s “economic inertia” has never been worse; perhaps, on a par with what it experienced in the 1930s…
Of course, we had a GOLD STANDARD back then; and thus, the government couldn’t impose an additional “tax” on the public by PRINTING MONEY…
Money-printing scam at taxpayer expense – Godfrey Bloom MEP
To conclude, the Zero Hedge graph depicts EXACTLY how far America has fallen; and sadly, all evidence points to – if anything – an acceleration of downward economic inertia. Given the nation’s MASSIVE, EXPLODING debts and deficits; it’s only a matter of time before the PRINTING PRESSES destroy what’s left of the declining empire…
Research Shows ALL Paper Money Systems Failed
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Hello to you Andy,
Great work you do and all of you over there at Miles Franklin. Keep it up and thank you.
Your recent article its very interesting you should mention the laws of diminishing returns which by definition say that all species have a laundry list of requirements and that all it takes is for one of those requirements to be below a minimum level and species cannot survive i.e. this is the miracle of nature. With us humans one of our biggest requirement is oil, fossil fuels which is falling to minimum levels. Didn’t oil production peak in the U.S. in 1971 the same year you mention. From these same years agreements like NAFTA were put in place which gave your Corporations access to resources around the world. And that any country that signed up to NAFTA and later refused to give access to the highest bidders for these resources i.e. to these Corporations it was and is seen as an act of war. This was made very clear by your once then president, President Jimmy Carter. If you have time to research the data you will learn that oil production on a global scale peaked in 2005 and has generally hit a plateau since then. Later in July 2008 oil prices hit $147.50 a barrell with Brent & WTI. We all know what happened to the Global Economy after that and the year before the U.S. housing crash. You can’t say this was by coincidence.
I could write more Andy but my point is everybody is blaming everybody and everything but no one ever mentions that we have hit “Peak Oil.” We cannot have a debt based currency without continous exponential economic growth and we cannot have continous economic growth without increasing the oil production/oil supply. To mention we are hitting peaks in other resources also. Water is becoming a major concern for World Authorities. We can live with out oil but we can’t live with out water. That’s where you see the IMF, The World Bank, the WTO, The U.N. all backing Corporations to take control of key resources, scary stuff. Google Maude Barlow in Canada if you ever want to follow that one up. She’s one good woman.
And one more little factor that happened in 1971 when the U.S. beacame an oil importing Nation. With all this oil to produce everything and so little money, that was one reason why we severed our links between money and gold and went on to create money through ledger entries and fractional reserve. This is just an opinion I hold.
I say and I haven’t heard anybody say this and that is because oil production has peaked growth is over and we cannot create any more money through ledger entries and have little choice but to go back to some form of Gold Standard.
On a seperate note I think the use of the term “paper gold” by Writers/Commentators is a big mistake. I say this because it gives not not so experienced the impression that this stuff is actualand that there is something there of value that one can hold. The same goes for “Paper Money”. If I was writing about a paper slam on the gold price I would say something like quote; Today the banks incresed or decreased False Ledger Entries on their computers that drove down the price of gold or vis-versa. All I’m talking about here is language/wording used to communicate gold/silver slams. Everything else I learn from people like your self Andy.
That’s all I have to say on the subject and I’ll look forwward to your writing in the future.
With kind regards,
Your Irish Subscriber.
Great commentary, and a lot to digest. To start, I have written extensively on diminishing returns of central planning, as in last year’s /diminishing-returns.
As for peak oil, I have also written quite a bit on the topic – especially as my prior life was as an energy analyst from 1996-2005. Not certain if peak oil is here, but certainly peak cheap oil.
As for not liking PAPER gold as a term, what else should it be called? It seems pretty apropos to me.