As the Financial Circus continues today, pushing down the precious metals prices, millions of Americans are going to get wiped out when the collapse of U.S. net worth begins in earnest. Anyone with a bit of common sense must realises that the financial markets today are totally disconnected from reality.
With new stories of 40 million Russians to take part in “Nuclear Disaster” drill, the Philippine President telling President Obama “To Go To Hell”, and suggesting that he is buying weapons from Russia, U.S. Suspends Diplomatic Relations With Russia based on the mess that is Syria, U.S. Ends Fiscal 2014 With $1.4 Trillion Debt Increase the third largest in history, Deutsche Bank troubles raise fear of global shock, so it’s completely ‘mysterious’ that the gold and silver prices are falling. Surely this is totally contrary to normal financial orthodoxy?
With 90% of the U.S. media now in control by six large mega-corporations, Americans have no idea just how bad the U.S. financial system has become. News stories today that would have caused a stock market crash and a spike in the precious metals years ago… no longer are a realistic barometer of the market today. Instead, the broader Stock, Bond and Real Estate Markets where 99% of Americans are invested, continue to be propped up.
How propped up? Well, let’s say by a staggering $31 trillion in the past six years. According to the wonderful folks at the Federal Reserve, U.S. net worth increased from $57.9 trillion Q2 2010, to a stunning $89 trillion Q2 2016:
I would imagine a lot of wealthy Americans believe they are living life. However, that $31 trillion in additional wealth is a nothing more than a fiscal digital mirage. For wealth to grow, more energy must be burned and positive economic activity must be generated. This is the foundation logic behind all economic principles.
Unfortunately, Americans did not burn more energy to create this additional $31 trillion in U.S. net worth. In fact the total U.S. energy consumption in 2016 will likely turn out to be less than it was in 2010: in itself not exactly an exemplar year
This chart is very simple to understand. The left axis shows U.S. net worth in trillions of dollars while the right axis indicates total U.S. energy consumption in quadrillion Btu’s. As we can see, total U.S. energy consumption has fluctuated little, and has been flatlining for the past six years.
Moreover, total U.S. energy consumption will likely be lower in 2016 (96.5 quad Btu’s) compared to 2010 (97.4 quad Btu’s). On the other hand, total U.S. net worth has climbed to $89 trillion versus $57.9 trillion in 2010. So, the real question is… where did this extra $31 trillion in U.S. net worth come from if total energy consumption was flat?
In all likelihood, the increase in U.S. net worth came via the tens of trillions of dollars of Fed and Central Bank liquidity and lot of smoke and mirror accounting shenanigans .
We can clearly see the same type of financial insanity taking place in the growth of U.S. GDP – Gross Domestic Product:
How the U.S. GDP increased nearly 25% in six years while its energy consumption remained flat is one for the record books. Traditionally U.S. energy consumption nearly tripled from 34 quad Btu’s in 1950 to 98 quad Btu’s in 2000, with U.S. GDP increasing proportionally as total energy consumption expanded.
However, the magicians at the Federal Reserve and U.S. Treasury have manipulated Net Worth and GDP for the past six years while energy consumption remained flat. The only thing that has actually happened is the unhooking of GDP statistics from reality. Unfortunately, most Americans don’t understand this “Ponzi Finance 101” and the economic gurus, bankrupt of any now ideas and running out of fiscal ammunition with the advent of negative interest rates, have bought into this fiscal ‘slight of hand’.
This Intelligent Stupidity, has detached GDP metrics from the reality of the economy. Rather than GDP, a true gauge is economic fortunes can be found in increases ‘fiscal income’. The country is full of really smart people who are wilfully ignorant when it comes to basic financial and economic sense. It would appear that the global financial elite are living on’ bet and hope economics’.
Most financial pundits in the Mainstream media (MSM) have bought into this illogical philosophy. They have run out of ideas, as the financial strategies of the past have been found wanting in this era of massive Quantitative Easing (money creation at the strike of a computer key). Not much can be learned from the alternate media either as a significant percentage of these alternative media sites are full of companies promoting ‘pump & dump’ stock scams and precious metals selling fraud based on faulty data sets.
Prior to the 1929 Stock Market Crash and Great Depression, American economist Irving Fisher made his infamous statement, “Stock prices have reached what looks like a permanently high plateau.” . We are in the same zone again in 2016, with economic and financial wisdom repeating the same flawed thinking of 87 years ago.
The Coming Thermodynamic Oil Collapse Is Worse Than I Realized
Bedford Hill of the Hills Group have reported their “Thermodynamic Oil Collapse” model based on over 10,000 man hours of designing and modelling. The results were so shocking, they sat on the model report for two years in an attempt to identify modelling errors and data flaws that gave such a shocking output. Alas they found nothing to allay their fears.
Anyone interested in reading the Hills Group work, you can go to their website, thehillsgroup.org, to check out their detailed report.
The rapidly falling EROI – Energy Returned On Invested is gutting the entire U.S. oil industry and economy. Instead of the United States enjoying real fundamental growth based on increased energy consumption, it would appear that financial measures have utilised questionable manipulation of data to elicit more acceptable indications of real growth in wealth.
U.S. energy consumption has been flat for the past six years, while U.S. GDP has supposedly increased nearly 25%,and the US’ supposed net worth has jumped 54%. Again, this appears to contradict sound fundamental economic theory.
While the Fed and Central Banks will continue to prop up the markets Quantitive Easing and buying bonds and stocks, ‘they can’t print barrels of oil‘ or energy useBTU’s that underpin real wealth creation
There lies the Rub…