M3

Click on chart to enlarge.

When money supply M3 (dark blue line) declines this precipitously, the chances of an economic recovery decline with it. By the way, M3 is no longer recorded as an official government statistic. Hmmm...

Almost two years of zero interest rate policies have not revived the economy or brought unemployment numbers down. 4.5% mortgage rates have not resuscitated the housing market. Fed Chairman Ben Bernanke was hinting at exiting fiscal stimulus programs a few months ago due to a "recovering economy."

I see failure. "Jobless recovery" is an oxymoron. The Fed's only hope is more monetary stimulus, more printing of USDollars, a second round of quantitative easing, debt monetization, etc., whatever opaque choice of words our government officials use. After all, they can't lower interest rates below zero.

In order to combat deflation, Bernanke's biggest fear, QE 2.0 will be implemented after the next financial crisis, to once again "save our financial system." But all it will do is stoke inflation, while debasing the Dollar, and reducing our standard of living.

High inflation, jobless growth

Just as independent thinkers like my friend Dick have been predicting (thanks to him again for submitting this article), the exploding monetary base would cause producer prices to rise, and eventually hit consumers in the wallet (call this the multiplier effect due to an increasing money supply). Merge that with a jobless "recovery", and you have a lethal combination of stagnant growth and inflation, or "stagflation", a term coined during the disastrous economy in the 1970's.

http://www.cnbc.com/id/35457298

Notice the last paragraph in the CNBC article:

In the claims report, the four-week moving average of new claims, which irons out week-to-week volatility, fell 1,500 to 467,500, the Labor Department said. The number of people still receiving for benefits after an initial week of aid was unchanged at 4.56 million in the week ended Feb. 6.

This measure has held below the 5 million mark for eight straight weeks and analysts believe it is starting to reflect an improvement in the labor market rather than people merely dropping off rolls because they have exhausted their benefits.

That last bit of editorial inserted by CNBC, a financial media outlet, sure looks like political spin based on no facts. Which "analysts" have come to this inane conclusion? It's not included in any of the other news releases that I've seen. As always, the devil is in the details of a press release, or footnotes in a financial statement and SEC filing.

Unemployment

You thought the US had unemployment problems. The official unemployment rate in the US is 10.2%, but according to shadowstats.com, the unofficial rate is 17.5%, if you include people who stopped looking for work, and no longer receiving unemployment benefits (i.e. they are still unemployed) and workers at an undesirable position earning less than what they previously earned. These numbers are admittedly horrible by everyone, the worst since the early 1980's by some measures, or the worst since the Great Depression by others.

But Spain has it even worse. Their official unemployment rate is 19.3%, but their unofficial rate is 34%! Latvia's official unemployment rate is 19.7%. Folks, that's no recession--that is an outright depression.

The alleged silver lining is unemployment figures are a lagging indicator, meaning the economy recovers before employment does. This is true, but this Great Recession has been so deep, and the economy has been so severely impaired, that it may take much longer before cash-strapped and credit-starved companies start hiring again.

If the American consumer is broke and jobless, they won't be consuming.

Hence, the "jobless recovery" may not be a recovery at all.